Govt to cut source tax on RMG exports

A file photo shows workers sewing clothes at a readymade garment factory in Dhaka. The government is set to reduce the tax at source on export of readymade garment following demands of apparel exporters, said finance ministry officials. — New Age photo

The government is set to reduce the tax at source on export of readymade garment following demands of apparel exporters, said finance ministry officials.They said that the government high-ups had already agreed to a proposal of RMG sector leaders to lower the rate to 0.70 per cent from the existing rate of 1 per cent. The National Board of Revenue is likely to issue in next few days a statutory regulatory order in this regard.A high official of NBR said that they were now working on reducing the source tax and a summary would soon be sent to the finance ministry for approval. The government increased the tax rate to 1 per cent in the budget for the current fiscal year 2017-2018 from the last year’s 0.70 per cent.Corporate income tax rate for garment factory owners was cut to 12 per cent in the budget from the previous year’s 20 per cent. The rate of corporate tax, however, was reduced to 10 per cent for green factories.Leaders of the apparel sector said that they placed their demand before prime minister Sheikh Hasina for cutting the export tax at the post-budget dinner of finance ministry on June 29.She instructed finance minister Abul Maal Abdul Muhith to take steps to reduce the tax rate, they said. Exporters Association of Bangladesh president Abdus Salam Murshedy on Saturday told New Age that they were hopeful that a SRO would be issued by this month after completion of all legal procedures. NBR initially set the source tax rate at 1 per cent for garment export in FY 2016-2017 but later cut the rate to 0.7 per cent for the year following exporters demand.